EPS Financial Services Pvt. Ltd. Vs ITO (ITAT Kolkata)
The assessee filed appeals for Assessment Years 2016-17 and 2019-20 against orders of the National Faceless Appeal Centre. The Tribunal considered separate issues for each assessment year and ultimately allowed both appeals.
Assessment Year 2016-17
The first issue concerned an addition of ₹2,25,55,000 made under Section 68 on account of alleged unexplained share capital and share premium received from M/s Himalaya Vyapaar Pvt. Ltd. and M/s Maroon Infrastructure Pvt. Ltd.
The assessee, a Non-Banking Financial Company (NBFC), had filed its return declaring income of ₹4,610. During assessment proceedings, the Assessing Officer observed that the assessee held substantial shareholdings in the two companies and noted that their registrations had been cancelled by the Ministry of Corporate Affairs. Based on the balance sheet, the Assessing Officer treated ₹2,25,55,000 as unexplained cash credit and added it to income.
The Tribunal examined the audited balance sheets as on 31.03.2015 and 31.03.2016 and found that the share capital remained unchanged at ₹4,94,15,000 in both years. It also noted that there was no change in current liabilities. Accordingly, the Tribunal held that no share capital or share application money had been received during the relevant year and that the addition was based on the Assessing Officer’s assumptions rather than the records. It further observed that the basis of the addition differed from the issue raised in the notice. The addition of ₹2,25,55,000 was therefore deleted.
